Practice Midterm with Solution
Essay by all_pro • March 13, 2017 • Exam • 1,458 Words (6 Pages) • 1,063 Views
Practice Midterm
Question 1: (1x10=10 points) circle the most appropriate choice
- Operations management is concerned with
- the design of a firm’s productive systems.
- the operation of a firm’s productive systems.
- the improvement of a firm’s productive systems.
- all of the above.
- (i) Forecasting customer demand is rarely a key to providing good quality service. (ii) The ratio of a firm’s monthly output to the number of labor hours used in the same month would be a measure of labor productivity
- (i) true (ii) false b. (i) false (ii) true c. both true d. both false
- A gradual, long-term up or down movement of demand is referred to as a
- Seasonality b. cyclicality c. trend d. correlation
- Exponential smoothing method is designed for
- Stationary series b. Seasonality c. Trend d. All of the a,b,c
- The exponential smoothing model produces a naïve forecast when the smoothing constant, α, is equal to
- 0.00 b. 1.00 c. 0.50 d. 2.00
- The economic order quantity (EOQ) model determines the optimal order size that minimizes
- annual carrying cost
- annual order cost
- total annual inventory cost
- annual purchase cost
- (i) Inventory management is concerned with how much to order and when to order. (ii) The three basic costs associated with inventory are holding costs, ordering costs and shortage costs.
- (i) True (ii) False
- (i) False (ii) True
- Both true
- Both false
- (i) The production quantity model, a variation of the basic EOQ model, assumes non-instantaneous replenishment.(ii) With the economic order quantity (EOQ) model, increasing the order quantity reduces inventory carrying cost.
- (i) True (ii) False b. (i) False (ii) True c. Both true d. Both false
- A continuous inventory system is also known as a
- fixed time period system
- fixed order quantity system
- fixed lead time system
- fixed amount system
1.10 A company may purchase larger amounts of inventory for all the following reasons except
- to take advantage of quantity discounts.
- as a hedge against future price increases.
- to obtain lower prices purchasing in volume.
- to reduce inventory carrying costs.
Question 2: (10 points)
Consider the following demand data:
Period | 1 | 2 | 3 | 4 |
Demand | 500 | 590 | 710 | 780 |
- (2 points) Compute a 2-month moving average forecasts for months 3 through 5.
[pic 1],[pic 2],[pic 3]
- (2 points) Compute a weighted 2-month moving average forecasts for months 3 through 5. Assign weights of 0.70 and 0.30 to the more recent and more distant data respectively.
[pic 4],[pic 5],[pic 6]
- (2 points) Compare the two forecasting methods using MSE. Which method is more accurate?
2-month SMA: MSE = (also accepted 44,135)[pic 7]
2-month WMA(more accurate): MSE = (also accepted 32,845) [pic 8]
- (2 points) Compute an exponentially smoothed forecast for period 3 using an value of 0.25. Assume that the first period’s forecast is the same as its demand.[pic 9]
[pic 10]
- (2 points) Compute an adjusted exponentially smoothed forecast for period 3 . Use the second period’s forecast from part d. Assume that the second period’s trend is zero.[pic 11]
[pic 12]
[pic 13]
Question 3: (10 points)
Consider the following demand data for outdoor recreational clothing:
2012 | 2013 | 2014 | Total | |
Winter | 130 | 135 | 145 | 410 |
Spring | 205 | 210 | 230 | 645 |
Summer | 115 | 145 | 160 | 420 |
Fall | 360 | 370 | 430 | 1160 |
Total | 810 | 860 | 965 | 2635 |
Develop a seasonally adjusted forecast model for these order data. Forecast demand for each quarter for 2015 (using a linear trend line forecast estimate for orders in 2015).
Seasonality factor:[pic 14]
Winter: 410/2635 = 0.1556
Spring: 645/2635 = 0.2448
Summer: 420/2635 = 0.1594
Fall: 1160/2635 = 0.4402
Forecast Annual Sales, 2015
[pic 15] | [pic 16] | [pic 17] | [pic 18] | |
1 | 810 | 810 | 1 | |
2 | 860 | 1720 | 4 | |
3 | 965 | 2895 | 9 | |
Sum | 6 | 2635 | 5425 | 14 |
Average | 2 | 2635/3=878.33 | ------------------- | ------------------- |
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